Boulder considers big-box retail, other options for Diagonal Plaza

Planners: Aging retail center's redevelopment unlikely without city support

A family leaves the Diagonal Plaza in Boulder last summer. On Tuesday, the Boulder City Council will discuss how far the city should go to help spark redevelopment of the Diagonal Plaza.
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CLIFF GRASSMICK
)

If you go

What: Boulder City Council meeting

When: 6 p.m. Tuesday

Where: Boulder Municipal Building, 1777 Broadway

Boulder leaders soon will start discussing how far the city should go to help redevelop the aging Diagonal Plaza shopping center -- such as conducting a blight study or approving public financing -- and whether they'd support a "big-box" retailer such as Lowe's, Walmart or Sam's Club at the location.

The center at 28th Street and Iris Avenue probably won't be redeveloped in the next decade unless Boulder provides substantial financial help such as tax increment financing, city planners wrote in a memo to the City Council last week.

On Tuesday, the council will be asked to provide input on how far the city is willing to go to support redevelopment of the site. Options include conducting a blight study, opening a dialogue with developers and retailers, and hosting an Urban Land Institute Technical Assistance Panel to develop other options.

Liz Hanson, the city's economic vitality coordinator, said part of the discussion should be whether the council would support a big-box retailer in the center -- a concept that generally doesn't get a warm reception in Boulder.

"I think it's the only commercially zoned area in the city that could comfortably fit a big box," she said. "Those types of retailers need a lot of land."

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The Diagonal Plaza -- which was built in 1965 and modified in 1995 with an addition facing 30th Street -- has had high vacancy rates the past couple of years, shown signs of disrepair and contributed declining sales taxes, city officials say. It is home to the Department of Motor Vehicles, Sports Authority, 24 Hour Fitness and Vic's.

Potential redevelopment of the area has been compromised because its 657,000 square feet of buildings are on 15 parcels of land -- each with separate owners -- and there are some long-term leases, officials said.

While no formal redevelopment applications have been filed, city officials have received inquiries from developers, according to documents provided earlier this month to the Boulder Planning Board.

In late August, the city of Boulder selected a team of consultants to provide a preliminary economic analysis of the Diagonal Plaza study area. The analysis noted that a big-box development at the site could feature 243,000 square feet of retail uses and a 136-room hotel; a "horizontal" mixed-use scenario could feature 180,000 square feet of retail, 160 residential units and a hotel; and a "vertical" mixed-use scenario could feature a higher-density mix of 169,000 square feet of retail, 402 residential units and a hotel.

The location, the consultants said, would be attractive to a large retailer such as Lowe's, Walmart or King Soopers Marketplace -- three retailers that have expressed interest in Boulder -- and others such as Sam's Club, Kohl's and JCPenney. In 2002, Walmart was unsuccessful in its bid to open a store at the Diagonal Plaza.

The cost to acquire the 15 properties could end up around $45 million, according to estimates in the feasibility study. Plus, the study said, additional demolition and development costs would total $66 million for the big-box scenario, $74 million for the horizontal mixed-use scenario and $131 million for the vertical mixed-use scenario.

Projected revenue varied from $24 million in the big-box option to $43 million in the horizontal mixed-use option to $143 million in the vertical mixed-use option.

The consultants said the vertical mixed-use option appeared the most feasible. But they found that all three options would need some form of public financing, such as tax increment financing -- which earmarks property tax revenue from increases in assessed values in a district -- or a public improvement fee.

At a meeting in September, members of the Boulder Urban Renewal Authority cited a need for affordable shopping in Boulder and said the Diagonal Plaza is a prime big-box locale.

"This is the last, best place for a big-box development to occur in Boulder, and the city needs a mass retailer in the core area," they said.

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